Online community GeoCities Inc has signed a definitive agreement to acquire web site linking technology provider Starseed Inc, more widely known as WebRing, for up to $34.8m in stock and cash. Under the terms of the deal, GeoCities will issue up to 775,000 shares of its common stock and pay $2.0m in cash in exchange for all the outstanding stock and options of Starseed. The actual number of shares issued will be reduced based on the liabilities of Starseed assumed by GeoCities. The $34.8m price tag is based on the maximum number of shares being offered and Tuesday’s closing price of $42.375. Starseed’s WebRing technology allows the creation of affinity-based communities by linking web sites of common interests. The WebRing site boasts 66,000 separate affinity-based rings, or member groups, and over 900,000 members. One of the better known rings is devoted to 3Com Corp’s Palm Pilot device. The idea is that by visiting any one of the sites that have joined the Palm Pilot ring, consumers can quickly and easily access hundreds of other sites devoted to the same topic. The technology allows for individuals known as ring masters to invite others to join their community. The system can support a nearly unlimited number of separate and distinct rings across the internet, allowing for the creation of tens of thousands of different communities. Starseed claims WebRing has experienced an average monthly growth rate of over 8.5% during 1998 and daily page requests from visitors exceeded 1.6 million. After the acquisition, which will be accounted for as a purchase, Starseed will operate as a wholly-owned subsidiary of GeoCities. The company will continue to be based in Ashland, Oregon as a free web-based service with its own brand identity, GeoCities said. It will be operated by its current management team and will continue to develop and improve the WebRing technology and establish additional revenue-providing capabilities. GeoCities said the purchase complements its strategy to extend the features and functionality of its own site.
